Court Rejects LAX Hotels’ Claims On Banquet Fees

In a blow to hotels near Los Angeles International Airport already suffering from high vacancies, a state appeals court has ruled against them in a fight over tips. The Second District Appellate Court upheld a 2006 city ordinance requiring that hotel managers turn over “service fees” they collect to banquet staff, porters and other employees. Hotel executives haven’t decided whether to pursue a state Supreme Court appeal of the ruling, which could result in retroactive payment of millions of dollars. The ruling, which reverses a district court’s rejection of the ordinance, sends the case to Superior Court for trial, where damages and back payment will be determined. As a result of the ruling, the employees of hotels can proceed in their lawsuit to collect their share of service fees charged.
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